It's Just Magic - Negative Yielding Debt

Published Thu, 19 Nov 2020 09:09:23 -0500 on Seeking Alpha

Seeking AlphaToday's Market | Market OutlookIt's Just Magic - Negative Yielding DebtNov. 19, 2020 9:09 AM ET|| Includes: BIL, BNDX, BWX, DDM, DFVL, DFVS, DIA, DIAL, DOG, DTUL, DTUS, DTYL, DXD, EDV, EEH, EGF, EPS, EQL, FEX, FIBR, FIXD, FLIA, GBIL, GIM, GOVT, GSY, HUSV, IEF, IEI, IGOV, IVV, IWL, IWM, JHML, JKD, OTPIX, PLW, PSQ, PST, QID, QLD, QQEW, QQQ, QQQE, QQXT, RISE, RSP, RWM, RYARX, RYRSX, SCHO, SCHR, SCHX, SDOW, SDS, SH, SHV, SHY, SPDN, SPLX, SPUU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXU, SPXV, SPY, SQQQ, SRTY, SSO, SYE, TAPR, TBF, TBT, TBX, TLH, TLT, TMF, TMV, TNA, TQQQ, TTT, TWM, TYBS, TYD, TYO, TZA, UBT, UDOW, UDPIX, UPRO, URTY, UST, UWM, VFINX, VGIT, VGLT, VGSH, VOO, VTWO, VUSTX, VV, ZROZby: Mark J. GrantMark J. Grant Chief Strategist, bonds, Special Situations, portfolio strategySummaryWe now have $16.9 trillion of negative yielding debt bouncing around the world.
China has joined the crowd and just sold negative yielding debt in Europe.
Virtually everyone supposes that this type of magic will not take place in the United States.
It's still magic, even if you know how it is done.
I know how they do it. It is a flick of the wrist, a nod of the head, and then a tap on the keyboard, and money appears from nowhere. All of this comes from the world's central banks, as they reduce the cost of borrowing money, for the countries they represent, to less than Zero.
We once thought, mistakenly now of course, that Zero was the line in the sand. Who would pay to lend money, after all, for the privilege of lending it. For thousands of years there was no such thing and then poof, during the financial crisis of 2008/2009, the line in the sand was crossed and the magic prospered and flourished.
"Disbelief in magic can force a poor soul into believing in government and business...."
- Tom Robbins, Even Cowgirls get the Blues
Besides recognizing the magic that has taken place, I note an incredible amount of it. We now have $16.9 trillion of negative... Read more